Man Of Mettle

THE year was 1935. Bhola Nath Bagri, then five years old, decided he didn't like the way his first name sounded. And on his first day to school in Amritsar, he made a bargain with the munshi escorting him. He'd attend school only if he was allowed to enrol under another name. A hesitant munshi relented, for he was under strict instructions to put the child in school. That's how Bhola Nath Bagri became Raj Kumar Bagri.

Impetuosity and initiative have been regular punctuations in Lord Raj Kumar Bagri's life since then. It was this that brought him to London when the government of India changed its policy on the import of metals in 1958 and made Bagri foresee a future in metals in London. He persuaded his bosses at the Calcutta-based Binani group to shift him abroad. Today Lord Raj Kumar Bagri is chairman of the London Metal Exchange (LME) and arguably the most important man in the metals trade in the world. Says he: "Nobody gives anything on a platter. But people have to have confidence in you."

It was again his characteristic pluck that got Bagri his first major deal in London, despite much scepticism from experts in the business. With a paid-up capital of just £1,650, Bagri founded his company Metal Distributors UK Ltd (Metdist). A year after he landed in London, he filled in a tender for a ministry of defence disposal for 1,000 tonnes of copper. No guarantees or deposits were required. Bagri received a call within 72 hours informing him of his success.

He didn't quite believe it. Accustomed to the vagaries of the Indian bureaucracy, Bagri thought there had to be a catch somewhere. He sought an appointment with the director. "Back home in India," he told him, "nobody would have touched me with a bargepole. Why did you people choose me?" "That's all right," answered the director. "We are no fools. Our enquiries told us you were a decent fellow. In any case, we are not parting with the goods till you pay us the entire money." More than the £30,000 Bagri made on the deal, it was the lessons it taught him that he values—that even a staid government department was prepared to be pragmatic when it came to business. That it's not always the amount of money you have in your bank account but the trust people have in you that counts.

Trust is also something that Bagri takes on face value. Says his son Apurv, 37: "Many years ago my father heard Dr Mahathir Mohammed, the Malaysian premier, speak about foreign investments. He had said: 'Profit is not a dirty word in Malaysia. We just want an equitable share.' When my father took the decision to open a couple of copper fabricating units in Malaysia in 1982-83, it was on the strength of what Mahathir had said in that speech."

As the first non-British to be elected chairman of the LME, Bagri heads an organisation whose turnover in 1996 was 47 million lots, representing a billion tonnes of metal valued at over $2,000 billion (Rs 7,200,000 crore). Over 95 per cent of the worldwide futures trading in copper is carried out in LME and 100 per cent for aluminium, zinc, lead and tin. The prices determined in the LME are carried on over 20,000 screens worldwide, of which 3,500 are in the US.

Since 1972, when Bagri first got elected to the committee, to 1983, when he moved on to the board of directors, he's witnessed all the crises that have struck the metals world. The tin crisis of the mid-'80s nearly crushed the LME when 22 sovereign governments defaulted on payments of $900 million. Says Bagri: "It took three years of negotiations to sort that out; in the end they paid just 33 per cent of what they owed us. But we survived."

Another misadventure unravelled with the Sumitomo affair of the early '90s, when Yasuo Hamanaka, one of the company's metal dealers, indulged in unauthorised dealings in copper that resulted in losses of some $2.6 billion. The LME became aware of the crisis even before the media caught on to it. Says Bagri: "It's inevitable that any free and open market will attract players seeking a 'quick buck'. They have a shrewd idea of where the prices are going and they often have a lot of cash. Provided they operate within regulations, such players are good for the market. They reduce the cost of hedging. Unfortunately, as the Sumitomo affair revealed, it doesn't always happen that way."

 The tin crisis, however, had changed the old way of doing things at the LME. Constitutional changes were brought about. Changes, which in the words of R.J. Gatehouse, director at Metdist, "brought the constitution of the LME up to the '90s and (made it) ready to face the challenges of the 21st century. We were a little sleepy." To be sure, there was some resentment over the way Bagri reconstituted the board of directors, but LME members have been generous enough to vote him chairman for the fifth consecutive year, an honour bestowed on none so far.

His greatest honour, however, came this year when Bagri acquired the privilege of adding the honorific Lord to his name—not through the system of nomination but through the more prestigious honours list. Proud of his success, messages of congratulations poured in from friends from as far as Canada and Japan, from people Bagri had dealt with years ago.

Though he is not allied to any political party and doesn't in general like to mix with politicians, he thinks his "views are more in tune with the Conservatives". Also Metdist, his company, is a surprisingly incrementally built organisation. Says Bagri: "We don't go for the big bang theory. Fundamentally, we deal with the same companies we did 30 years ago."

Part of the faith he generates has to do with the tremendous sense of loyalty he inspires and acts out. When he first came to London in 1958 it was the manager of the Banque Nationale de Paris who helped him out by providing office space for a couple of months because one of his assistant managers was on leave. That gesture was nearly 39 years ago but, says Apurv: "Till this day that bank is the most important bank for the family."

This strong sense of loyalty might have its origins in his humble background. Born in a family trading in wool, Bagri had to sacrifice a higher education after the death of his father when he was 15. He developed a sense of frugality early on and took it with him in his business practice. Quoting an instance, son Apurv says: "When I first joined my father he fixed my salary at £5,000 a year. That was lower than the messenger boy's. One day I told him that I wanted a raise and he told me to write out my earnings and expenditure. I gave the sheet to him at breakfast the next day and he handed it back to me. What he had done was typical:scratch off a few items on the expenditure list."

Bagri himself comes through as a very softspoken and humble person, anxious to downplay the zeroes in his Rs 1,500-crore group. He loves Indian classical music and is a voracious reader. He is sparing in his advice as well. Drawing him into commenting on India's economic policies is difficult. All you get is: "It's for India's people to decide the kind of governance they want. They are wise." But the advice he gave Apurv the day he joined Metdist in September 1980 is one his son cherishes the most in his life. "He told me that your reputation is like a thread. It has a certain elasticity but if you pull it too hard it will snap. You can tie a knot, but every time you run your fingers over the thread you will know where the knot is."

 And Bagri hasn't had any knots in the thread he has woven out of metal.